Aqua index

ABSTRACT

A method and system for computing a stable index value of a regulated substance by computing a virtual value of the substance based on the value of a freely marketed product of the substance. Particularly the invention may be applied to develop a stable investment instrument for investing in fresh water.

PRIORITY INFORMATION

This is a divisional of U.S. patent application Ser. No. 13/209,547filed Aug. 25, 2011, currently pending, which is a divisional of U.S.patent application Ser. No. 12/194,551 filed Aug. 20, 2008, issued onSep. 20, 2011 as U.S. Pat. No. 8,024,239, which claims priority of U.S.Provisional App. No. 60/956,933 filed Aug. 21, 2007.

FIELD AND BACKGROUND OF THE INVENTION

Various methods and systems for investing in commodities are possible,and particularly, methods and systems may determine of a stable indexprice and permit the use of a commodity as an investment for financiersand permit the holder of the commodity to generate capital to developthe commodity.

Many investors choose to invest in commodities as a hedge againstinflation. In order to make commodities investment more secure, manyfinanciers prefer to invest in an indexed commodity. The index gives acomposite representative price based on the price at multiple suppliers.This allows the investor to invest in the commodity without beingexposed to local instabilities in the markets.

Particularly, fresh water, being an essential and irreplaceablecommodity that is becoming scarcer, is a very desirable commodity forinvestment. Furthermore, investment money is also needed for buildingplants for acquiring, purifying and distributing water. On the otherhand, the market for water is strongly affected by local factors andprices vary wildly from place to place. Also temporally, supply anddemand for water may vary very wildly due to short-term events. Pricesof water in the USA are from 0.16 to 1.35 usd/m3 in Germany 1.80 usd/m3,in Finland 0.50 usd/m3, and 4.00 usd/m3 for desalinated water in SaudiArabia. Thus in order to invest safely in water an investor needsadditional protection.

In many water rich areas, water is not developed and squandered becausealthough water is a very valuable commodity, water has no market valueand cannot currently be sold, exploited or used as security for loans.Therefore water holders (e.g. regional governments or landholders havingwater resources) often choose to develop industries that provide quickprofits even when these industries destroy valuable water resources. Ifa world water market were developed, water resources would become avaluable asset useful as for guaranteeing loans and this would encourageimproved protection of water resources. Furthermore, developing a watermarket would make it possible for water holders to generate investmentcapital necessary to develop water resources.

A major problem in developing an integrated market for water isconnected to the highly regulated nature of water as a commodity. Thepolitical and economic importance of water limits the potential of tradeas a policy tool to mitigate water scarcity. National and localgovernments use exit fees, fixed taxing and progressive taxing of wateron one hand, and subsidization of water on the other hand to protectlocal water supplies or encourage water intensive industries (likeagriculture). Having a wide range of prices (e.g. 0.16-4.00 usd/m3) andexit fees (e.g. 0-70% in different provinces in Australia), and taxrates (e.g. 10-50% progressive tax and 30% subsidization for agriculturein Israel), no one has been able to build a stable international marketfor water.

This has created a situation in which, although fresh water isrecognized as a commodity by the European Court and although fresh wateris an essential commodity with limited supply and increasing demand (andthus a desirable investment [for example see the article “InventingWater's Future” published by Forbs.com 6/19/08 by William Pentland]),and although there is a great need for investment capital to developwater resources [for example see World Water Council, World Water ForumTask Force on Financing Water for All, Report 1, by Paul Van Hofwegen,2006] no one has been able to build a stable investment instrument forwater. There is no integrated world market for water as there is forpublicly traded commodities like wheat, corn, oil or gold. There is noinvestment instrument based on water price (S & P using 50 companiesvalue). There is no public trading of a water index or water futures orwater as a commodity on any major stock exchange.

There is thus a widely recognized need for, and it would be highlyadvantageous to have an investment instrument for water that is based ona stable free market price.

SUMMARY OF THE INVENTION

Various methods and systems are possible for providing an investmentinstrument and method for a investing. Particularly, a system or methodmay facilitate investment in a substance by determining a free marketprice of the substance based on a virtual value of the substance as thevalue is reflected in the price of a freely traded product.

An embodiment of an instrument for stable investment (a financialinstrument may include for example a bond, a certificate, a futures, astock, a basket) in a commodity may include a collateral having avaluable substance. The instrument may further include a virtual valueof the substance calculated according to an influence of a price of thesubstance on the price of the product.

In an embodiment of an investment instrument the valuable substance maybe regulated such that a price of the substance in trading is stronglyaffected by non-market factors (such as government subsidies, unusualtaxes [e.g. excise taxes, fixed taxes, progressive taxes and exportfees] or controls) while the product from which the virtual value iscalculated may be a publicly traded commodity with a free market price.

In an embodiment of an investment instrument the substance of value inthe collateral may be fresh water.

In an embodiment of an investment instrument the virtual value iscalculated from one or more of an agricultural commodity, a manufacturedcommodity and a fuel (for example a biofuel).

In an embodiment of an investment instrument the virtual value of thesubstance may further depend on one or more of the following factors:the quantity of the substance in the product, the quantity of thesubstance utilized to produce the product, and the quantity of an outputproduced from the product (for example the quantity of energy outputfrom combusting the product, a quantity of the substance produced as abyproduct of utilizing the product).

In an embodiment of an investment instrument the virtual value mayfurther on a market weight of the product.

An embodiment of a method of investing may include calculating an indexvalue of a substance. The index value may be at least partiallydependent on a virtual value of the substance. The virtual value may becomputed based on the influence of the value of the substance on theprice of a product of the substance.

An embodiment of a method of investing may further include acquiring aright to a collateral containing the substance according to the indexvalue of the substance.

In an embodiment of a method of investing, trade may be regulated in thesubstance for which the index price is calculated whereas the productfrom which the virtual price is calculated may be a publicly tradedcommodity.

In an embodiment of a method of investing, the substance for which anindex price is calculated may be fresh water.

In an embodiment of a method of investing, the product from which thevirtual price is calculated may be one or more of the following anagricultural commodity, a manufactured commodity, and a fuel.

In an embodiment of a method of investing, calculating the index valuemay employ one or more of evaluating a quantity of the substancecontained in the product, evaluating a quantity of the substanceutilized to produce the product and evaluating a quantity of an outputfrom the product.

An embodiment of a method of trading a collateral may includedetermining a market value of the collateral based on an index value ofa substance of the collateral. The index value may be calculated using aformula that is at least partially dependent on a virtual value of thesubstance in a product.

An embodiment of a method of trading a collateral may further includemarketing a right to the collateral according to the market value of thecollateral.

In an embodiment of a method of trading a collateral, trade in thesubstance of the collateral may be regulated whereas the product usedfor calculation of the virtual value may be a publicly traded commodity.

In an embodiment of a method of trading a collateral, the substance ofthe collateral may be fresh water.

In an embodiment of a method of trading a collateral, the product mayinclude one or more of an agricultural commodity, a manufacturedcommodity, and a fuel.

In an embodiment of a method of trading a collateral, the virtual valuemay further depend one or more of a quantity of the substance in theproduct, a quantity of the substance utilized to produce the product,and a quantity of an output from the product.

An embodiment of a system to manage an investment may include a memoryconfigured to store a virtual value of a substance, and a processor. Theprocessor may be configured for computing the virtual value of thesubstance in at least one product, and calculating an index value of thecollateral. The index value of the substance may be partially dependenton the virtual value of the substance.

In an embodiment of a system to manage an investment the substance maybe a regulated commodity and the product may be a freely tradedcommodity.

In an embodiment of a system to manage an investment the substance maybe fresh water.

In an embodiment of a system to manage an investment the product mayinclude one or more of an agricultural commodity, a manufacturedcommodity, and a fuel.

In an embodiment of a system to manage an investment the memory may befurther configured to store one or more of the quantity of the substancein the product, the quantity of the substance utilized to produce theproduct, and the quantity an output from the product.

Terminology

The following terms are used in this application in accordance withtheir plain meanings, which are understood to be known to those of skillin the pertinent art(s). However, for the sake of further clarificationin view of the subject matter of this application, the followingexplanations, elaborations and exemplifications are given as to howthese terms may be used or applied herein. It is to be understood thatthe below explanations, elaborations and exemplifications are to betaken as exemplary or representative and are not to be taken asexclusive or limiting. Rather, the terms discussed below are to beconstrued as broadly as possible, consistent with their ordinarymeanings and the below discussion.

-   -   Acquiring a right to a collateral means receiving entitlement to        derive a benefit from the collateral.    -   Marketing a right to a collateral means conveying entitlement to        benefit from the collateral in return for some payment or        benefit.    -   A product of a substance is an item or material, associated with        the utilization of the substance (for example the substance may        be utilized in production of the product or in order to bring        the item to market). (As a result, the cost of the product may        be influenced by the cost of the substance. A substance may also        be considered a product of itself).    -   The substance of a collateral is something of general value that        can be derived from the collateral.    -   A virtual value of a substance is a value of the substance        obtained by calculating the influence of the value of the        substance on the cost of a product of the substance or the        influence of the cost of the substance on the cost of a product        that is a substitute for a commodity.

BRIEF DESCRIPTION OF THE DRAWINGS

Various embodiments of a method and system for investment are hereindescribed, by way of example only, with reference to the accompanyingdrawings, where:

FIG. 1 is an illustration of an embodiment of an investment instrument;

FIG. 2 is a generalized flowchart of a method of marketing a commodity;

FIG. 3 is an illustration of a computation of a price index;

FIG. 4 is a generalized flowchart of a method of investing.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

The principles and operation of a method and system for investmentaccording to various embodiments may be better understood with referenceto the drawings and the accompanying description.

Referring now to the drawings, FIG. 1 is an illustration of a financialinstrument for investing in fresh water. Collateral 101 is a large bodyof fresh water owned by a municipality 102 (for example municipality 102may be the state of Michigan and collateral 101 a lake). The substanceof value in collateral 101 is fresh water. It will be understood to oneskilled in the art, that although the water in collateral 101 hassignificant value and is easily available, nevertheless municipality 102cannot be sell outright the water in collateral 101 due to legallimitations and limitations to pumping rates and the like. Nevertheless,Municipality 102 needs revenue and capital for development projects(including projects to protect or promote use of collateral 101 forexample sewage treatment plants or building a marina or building apumping station). Therefore municipality 102 markets water rights via abroker 120 and receives a commission as well as credits that can be usedas security for loans.

The value of water in collateral 101 is difficult to evaluate becausewater trade is regulated by government legislation, licensing, officialmonopolies, taxes and subsidies. Therefore water is not freelymarketable and has no consistent price. Therefore, broker 120 employs astandardized index 130, which is used to compute an index value 104 ofwater (for example $1.07/m³ as illustrated in the figure). In order tocompute such a value broker 120 bases computations on the value of waterin various localities as well as the virtual value of water in freelymarketable products that contain water or utilize water in theirproduction (examples are described herein below). Index values arestored in a memory of a desktop computer and calculated by the processorof the computer. Data for determining market shares and prices ofproducts comes for statistics available over the Internet (for examplestatistics may be acquired from web sites associated with commoditiesmarkets, futures markets, stock exchanges [for example at N.Y., London,Tokyo]) and therefore can be updated easily in real time. Alternatively,statistics may be updated from periodically from published statistics orfrom statistics released from a government agency.

Broker 120 issues a certificate 106 (alternatively another financialinstrument can be used for example a bond, a share, a stock, a future)for the water of collateral 101 and sells certificates 106 according toindex value 104. In the example of FIG. 1, since index value 104 is$1.07/m³ the broker 120 sells certificate 106 for 1000 m³ for $1070 plusa 2% commission. An Investor 108 (who bought certificate 106) may redeemcertificate 106 by requesting that municipality 102 deliver 1000 m³ ofwater to investor 108 (investor 108 being responsible for transportationand handling cost), or investor 108 may hold onto certificate 106assuming that index value 104 will rise and then investor 108 will sellcertificate 106 to another investor (possibly via broker 120) andcollect a profit (minus any brokerage charges).

FIG. 2 is a generalized flow chart of a method marketing a commodity. Abroker searches for a resource that is under capitalized. For examplethere is a large quantity of fresh water available in the world and aneed for the water but not enough capital to develop or even protectthis resource. Therefore the broker chooses (block 211) to market freshwater. The broker must now locate (box 213) fresh water rights that canbe acquired as collateral. In the example of FIG. 2 the broker findsthat in Brazil there are a lot of natural lakes having large quantitiesof accessible water. Then it is necessary to define (box 215) a regionof evaluation. For example it is possible to evaluate the wateraccording to the value of water in Mexico and the Midwest United States(where there is a water shortage and water from the Amazon can easily beshipped) alternatively it is possible to evaluate the water according tothe world price of water. The broker chooses to index fresh wateraccording to the international value (worldwide) of water. Particularly,first the broker establishes (block 217) the main products of water inthe world market and resolves (block 219) the weights for each productand ascertains (block 220) the price of each product and computes (box221) the value of substance according to each product and calculates(box 222) an index value of the substance based on the compound price ofthe various products each weighted by its weight factor. An example ofestablishing (box 217) products resolving weights (box 219),ascertaining prices (box 220) computing a values (box 221) andcalculating an index value (box 222) is illustrated hereinbelow in FIG.3 and the accompanying description.

The broker then divides (box 223) the collateral into portions (forexample a share which may be 1000 m3 of water, the collateral may bemarketed using a share or another financial instrument as known in theart) and determines (box 225) a market value of each share according tothe index value and the condition of the collateral (for example theprice of the share may take into consideration the quality of the waterin the lake or the location and accessibility of the water). For exampleif the index value is 1.07 usd/m3 and a share of the lake contains 1000m3 then the market value of share may be 1070 usd. The broker thenacquires (box 227) rights to market the collateral. For example thebroker acquires (box 227) rights to the collateral by setting up afutures contract or supply contract with the municipality that owns alake. Then the broker sells (box 229) shares to the collateral to aninvestor at the market value plus a commission.

The index value is sometimes updated. Particularly, periodically thealgorithm checks (box 235) if it is time to update the state of thecollateral (for example this may be done yearly or monthly or wheneverthere is a need to expand or adjust the index) if “yes” then aprofessional appraiser appraises (box 236) the collateral for thequantity, quality and availability of the water and the value of thecollateral is adjusted (box 237) and then any new collateral necessaryis located (box 213) the share certificates are adjusted (box 239) tomake sure that each certificate is covered by valid assets and ifnecessary new collateral is located (box 213). If it is not time toadjust the collateral, (“no” in box 235) then the algorithm checks (box233) if the time has comes to update the weights (Wx and Wx_(i) [e.g.see FIG. 3 lines 362 and 363 a-f respectively]) (for example this may bedone monthly or even daily). If “yes” then the weights are resolved (box219) according to periodic reports of international trade organizationof the quantity of trade of various goods in the world. If “no” then thealgorithm checks (box 231) if the time has come to update product prices(e.g. see FIG. 3 lines 364 a-f). If “yes” then the price of a product isascertained (box 220). The price of a product may be updated, daily,hourly or in real time according to commodity prices available on theInternet or from other source. If “no” then trading continues (forexample selling 229 rights to the collateral).

FIG. 3 shows the results of example calculations of the weights ofproducts and values of a commodity. In the example of FIG. 3, eightproducts (water products) are chosen 211. For each water product (A, Q,U, H, I, E, T, and D: Export, Domestic, Desalinate, Bottled, purify,Food Crops and Biofuel) the product weights Wx (line 362) are theportion of the water market represented by that product. Then for eachproduct one or more representative cases are chosen. For eachrepresentative case a case weight Wx_(i) (lines 363 a-f) is resolved anda case value xi (lines 364 a-f) is ascertained respectively.

In the example of FIG. 3, the broker resolves 219 by looking up tradedata that in the chosen region 5% of the water trade is for export(Wa=0.05) and 50% goes to domestic consumption (Wq=0.5) and 9.95% comesfrom desalinization (Wu=0.0995), 0.05% is bottled (Wh=0.0005), 5% ispurified (Wi=0.05), 20% is included as virtual water in food crops(Wt=0.2) and 10% is included as virtual water for production of biofuelsWb=0.1. Thus, in the example, the index price of water 369 is partially(W_(t)+W_(h)=30%) dependent on a virtual price of water.

Alternatively, the calculations for the index value could also includevirtual water used in manufactured products such as paper (where wateris used to suspend the wood colloids and in cleaning and finishingprocesses).

Concerning the agricultural portion, water is utilized in production ofagricultural commodities such as orange juice corn etc. Nevertheless, itwould be difficult to include irrigation water in the index calculationsbecause 1) much irrigation water is taken directly from natural sources(private wells/rivers/rain) and never accounted for 2) irrigation wateris highly regulated and subsidized. Virtual water refers to the volumeof water utilized for a product but not actually part of the product.Between 700-3500 liters of crop water are utilized to produce one kiloof cereal. Therefore, buying agricultural commodities essentiallyincludes purchasing water. By including the virtual price of water inagricultural commodities the broker determines a price for water that isdependent upon market forces where there is little governmentinvolvement influencing the price. This enables the broker to build astable market based index value 369 for water.

A global market weight factor W is resolved 219 for each product. Morespecifically in the example of FIG. 3, the global market weight factorsWa, Wq, Wu, Wh, Wi, Wr, and Wb (line 262) (in the example of FIG. 3 themarket weights are the market portion of Export, Domestic, Desalinate,Bottled, purify, Food Crops, and Biofuels Respectively) are computedbased on a fixed algorithm using available statistics.

Note that in the embodiment of FIG. 3 Wt₁, Wt₂, Wt₃, (line 263 e) (thecase weights of virtual water in each food crop) are based on thequantity of water physically contained (the quantity of waterconstituent in the product) in the commodity and not on the quantity ofwater utilized to produce the commodity. Thus for example a certainmarket includes in trade of food crops containing 1300 m³ of water. Inthat trade there are 500,000 Kg wheat (wheat is 60% water and thedensity of water is 1000 Kg/m³, thus 500,000 Kg wheat contains500*0.6=300 m³ of water). Then Wt₃=(500*0.6)/1300=0.23. Similarly thetotal water market (the sum of the water traded in all of the chosenwater products) is 6500 m³ and the total water contained in traded foodcrops is 1300 m³. Thus the market weight of virtual water of agriculturein the index value of water is the portion of the total water marketcontained in food crops Wt=1300/6500=0.2

In the example of FIG. 3 the virtual value 365 a of water in food cropsis computed as follows:

The commodity corn price in N.Y. is 400 usd/ton; corn contains 75% waterand utilizes 1500 m³ irrigation water/ton—

t₁=400*0.75/1500=0.2 usd/m3 is the virtual value of water in corn.

The commodity coffee price in N.Y. is 950 usd/ton, and coffee is 55%water and utilizes 3500 m³ irrigation water/ton. Thus—

t₂=950*0.55/3500=0.15 usd/m3 is the virtual value of water in coffee.

-   -   the commodity wheat price in N.Y. is 500 usd/ton; wheat contains        60% water and utilizes 1000 m³ irrigation water per ton—

t₃=500*0.6/1000=0.3 usd/m3 is the virtual value of water in wheat.

Taking into consideration each commodity case weights (line 363 e) fromthe total traded agricultural commodities will give us the virtual valuefor water in food crops, which is the T priceT=Wt₁*t₁+Wt₂*t₂+Wt₃*t₃=0.27*$0.2+0.5*$0.15+0.23*$0.3=0.20 usd/m3 365 a.Thus the virtual price of water in agricultural food products T isdependent on the market weight of each agricultural food product, themarket price of the agricultural food product and on the quantity ofwater utilized in production.

By including the virtual value of water in the index formula the brokercomputes a representative integrated value of water including theunregulated trade of water in other commodities (products).

Also in the example of FIG. 3, for the product desalinated water U, itis found that in the chosen evaluation region (the world water trade)647 m3 which is 9.95% of the total water trade is desalinated water. 20%of the worlds desalinated water is used by industrial cities Wu₁=0.20and the chosen representative case is Perth Australia which producesdesalinated water at a cost of u₁=0.80 usd/m². 50% of desalinated wateruse in the world is in vacation areas and islands Wu₂=0.50 and thechosen representative case is Bermuda, which produces desalinated waterat a price of u₂=1.50 usd/m³. 30% of desalinated water use in the worldis in oil exporting countries Wu₃=0.30 and the chosen representativecase is Saudi Arabia, which produces desalinated water at a price ofu₃=4.00 usd/m3. The weights are updated monthly while the representativeprices are updated weekly. Thus the value for desalinated waterU=Wu₁*u₁+Wu₂*u₂+Wu₃*u₃=0.2*$0.80+0.5*$1.50+0.3*$4.00=2.11 usd/m3 368.

Virtual water included in bio-fuels is another part of the water trade.In the example of FIG. 3, the combined market weight of three bio-fuelsis 10% of the total world trade of water Wb=0.1.

Many fuels like bio-diesel (produced from waste oils or oily plants andparticularly algae), biomethane (produced by anaerobic digestion oforganic waste) and ethanol (produced from fermentation of cellulouswaste or grain) contain no appreciable water. Therefore the watercontent of the fuel is not used to compute the weight factor Wb. Twoexamples of alternative bases of Wb are the total mass/volume of thebiofuel or the quantity of water output from combustion of the bio-fuel.For liquid fuels (like bio-diesel and ethanol) the total volume or massof the bio-fuels can used to compute the weight factor Wb. Alternativelyfor any bio-fuel and particularly for a gas (for example methane) wherethe volume and weight are not comparable to the water content or totalvolume of a liquid fuel, the mass of water output in combustion productsmay be used to compute Wb (alternatively for biofuel Wb could be basedon the energy output by combustion of the fuel or some other combustionproduct or constituent [e.g. carbon] of the fuel multiplied by aproportionality factor). Thus the total market of bio-fuels includes 650m3, which is treated as 10% of the total water trade 6500 m3. The volumeof ethanol sold is 390 m3 (Wb₁=390/650=0.6) and the volume of bio-dieselsold is 260 m3 (Wb₂=195/650=0.3). In the example of FIG. 3 the quantityof the water market in biomethane (on which is based the weight factorWb₃) is calculated based on the output of combustion of the methane. Useof combustion outputs to compute Wb can facilitate comparison betweenvarious biofuels that may have very different densities (alternativelyenergy production or carbon constituent other bases of comparison may beused). Particularly, in the example of FIG. 3 the market includes atrade of 38800 m3 of bio-methane. Methane has a density of 0.67 Kg/m3 atroom temperature and burning 1 Kg of biomethane produces approximately2.5 Kg of water. Therefore burning 38800 m3 of methane produces38800*0.67*2.5/1000=65 m3 water. Thus Wb₃=65/650=0.1.

The virtual price of water in biofuel is based on the water input toproduction of the fuel. To produce 1 ton of ethanol from corn utilizes3600 m3 of water and the price of ethanol is 800$/ton and thus thevirtual value of water in ethanol is b₁=$800/3600=0.22 usd/m3. Similarcalculations for biodiesel (where water is necessary for upkeep of algalponds) give a virtual water value of b₂=0.15 usd/m3 water. In theexample of FIG. 3 the virtual value of water in biomethane is based onthe quantity of water utilized in production. The cost of methane is3.00 usd/m3 and producing a m3 of biomethane utilizes 7.0 m3 of water(to keep the digester running) thus the virtual value of water in thebio-methane is b₃=3.0/7.0=0.43 usd/m3. Thus the combined virtual valueof water in biofuel B is dependent on the market weight of each product(the total mass of the fuel or the water output in combustion of thefuel) and the quantity of water utilized in production of the fuelB=Wb₁*b₁+Wb₂*b₂+Wb₃*b₃=0.6*$0.22+0.3*$0.15+0.1*$0.43=0.22 usd/m3 365 b.

Alternatively the CO₂ output from combusting the biofuel or the quantityof the carbon constituent in the biofuel could be used as a common basisof computing the weight factor of all the biofuels.

Once each product weight and the value of water in each product andclass of products is computed the prices are multiplied by therespective weights giving a combined value. In the example of FIG. 3 thesum ofWa*A+Wq*Q+Wu*U+Wh*H+Wi*I+Wt*T+Wb*B=0.05*0.92+0.5*0.77+0.0995*2.11+0.0005*20010.05*1.75+0.2*0.198+0.1*0.22=0.89 usd/m3 366. Ibis price is adjusted byadding a transport cost N=0.01 usd/m3 (for example the average cost ofshipping water from the water source to the distributor) and an exit feecost D=0.03 usd/m3 (for example the average exit fee paid by waterimporters for taking water from other municipalities) and E=−0.015usd/m3 the recycle rate (taking account of the fact that some wastewater re-enters the distribution system [by percolating intogroundwater/running off into rivers/or via engineered water reuse])giving an adjusted price of 0.91 usd/m3 367. Finally the final price isfound by multiplying the adjusted price by a supply and demand factorZ=1.12 (when there are a lot of sellers of water certificates and fewbuyers the price is adjusted up and vice versa when the sellersoutnumber the buyers) and a waste factor (1.05) which takes into accountthe increase of price to the consumer due to the loss of water betweenthe source and the consumer. Thus the index value of water in theexample of FIG. 3 is 1.07 usd/m3 369.

Using index value 369 of FIG. 3 (described above) companies getsecurities or purchase of water contracts for the value of the water atthe index value. A company distributes contracts in the form of waterbasket stocks based on the water index value. A company can enter intoagreements with finance institutions or investments houses—distributingwater basket stocks for their clients and getting agreeable commissionsand securities from the trading.

Alternatively a virtual value of a substance can also be computed basedon a cost of a commodity for which there exists a product of thesubstance that is a substitute for the commodity. For example, it ispossible to compute a virtual price for water from the price ofgasoline. Since ethanol is a substitute for gasoline and since a majorpart of the cost of ethanol production is water, then it is possible tocompute a virtual price of water based on the price of gasoline. Forexample since the price of gasoline is $700/ton and ethanol is asubstitute for gasoline and since one can produce 1 ton of ethanol fromcorn which utilizes 3600 m3 of water to grow, then the virtual value ofwater based on the price of gasoline is $700/3600=B=0.19 usd/m3.

FIG. 4 is a flowchart illustrating a method of investing. An investorfirst chooses (box 470) a commodity (for example fresh water) in whichto invest and then finds (box 472) a broker who is selling shares orother financial instrument (for example a bond, a certificate, afutures, a stock, a basket) in the commodity. Then the investor uses anindex value to the commodity calculated (box 474) by the broker (forexample index value 369 as described in FIG. 3 and the accompanyingdescription). According to the calculated index value, the investordecides (box 476) whether to invest. If “yes” then the investor buys(box 478) shares from the broker. If “no” then the investor chooses (box470) another commodity in which to invest.

In sum, although various example embodiments have been described inconsiderable detail, variations and modifications thereof and otherembodiments are possible. Therefore, the spirit and scope of theappended claims is not limited to the description of the embodimentscontained herein.

What is claimed is:
 1. A computer-implemented method of connectingtraders to an exchange, comprising: determining a first quantity ofwater utilized to produce a first quantity of a first traded product;using a first data feed to constantly feed to one or more processors avarying parameter of the first traded product; using one or moreprocessors to repeatedly detect the varying parameter of the firsttraded product in the first data feed and to receive at least once, inregard to the first traded product, the first quantity of water utilizedto produce the first quantity of the first traded product; determining asecond quantity of water utilized to produce a second quantity of asecond traded product; using a second data feed to constantly feed tothe one or more processors a varying parameter of a second tradedproduct; using one or more processors to repeatedly detect the varyingparameter of the second traded product in the second data feed and toreceive at least once, in regard to the second traded product, thesecond quantity of water utilized to produce the second quantity of thesecond traded product; using the one or more processors to repeatedlydetermine an index value of water applied to a particular amount ofwater based on the repeatedly varying parameter of the first tradedproduct, based on the first quantity of water utilized to produce thefirst quantity of the first traded product, based on the repeatedlyvarying parameter of the second traded product and based on the secondquantity of water utilized to produce the second quantity of the secondtraded product, using the one or more processors to continually adjustthe index value of water applied to the particular amount of water basedon changes in the constantly received varying parameter of the firsttraded product and changes, if any, to the first quantity of waterutilized to produce the first quantity of the first traded product andbased on changes in the constantly received varying parameter of thesecond traded product and changes, if any, to the second quantity ofwater utilized to produce the second quantity of the second tradedproduct, having the one or more processors instruct a digital displaydevice to display adjusted index values of water.
 2. The method of claim1, further comprising using the one or more processors to determine, incombination with the index value of water, a market value of a portionof the particular amount of water based also on at least one of (i) aquality of the particular amount of water from a particular source and(ii) a geographical region or location of the particular amount ofwater.
 3. The method of claim 1, further comprising using the one ormore processors to determine, in combination with the index value ofwater, a market value of a portion of the particular amount of waterbased also on a geographical location of the particular amount of water.4. The method of claim 1, further comprising using the one or moreprocessors to determine, in combination with the index value of water, amarket value of a portion of the particular amount of water based alsoon a quality of the particular amount of water from a particular watersource.
 5. The method of claim 1, wherein the quality of the particularamount of water includes a salinity of the particular amount of water.6. The method of claim 1, further comprising determining a water qualitybased on an amount of one or more substances in a collateral or waterasset comprising water, wherein the one or more processors areconfigured to determine a value of the collateral from the water qualityof the collateral or water asset and from the index value of water oradjusted index values of water.
 7. The method of claim 6, wherein theone or more substances include a salinity of the collateral or waterasset.
 8. The method of claim 1, further comprising using the one ormore processors to combine the index value of water with at least one of(i) a quality of the particular amount of water from a particular sourceand (ii) a geographical region or location of the particular amount ofwater.
 9. The method of claim 1, wherein at least one of the first andsecond traded products is an agricultural product, industrial product orprecious metal.
 10. A computer-implemented method of connecting tradersto an exchange, comprising: determining a first quantity of waterutilized to produce a first quantity of a first traded product; anddetermining a first water quantity constituent in the first quantity ofthe first traded product; using a first data feed to constantly feed toone or more processors a varying parameter of the first traded product;using one or more processors to repeatedly detect the varying parameterof the first traded product in the first data feed and to receive atleast once, in regard to the first traded product, the first quantity ofwater utilized to produce the first quantity of the first traded productand the first water quantity constituent in the first quantity of thefirst traded product; determining a second quantity of water utilized toproduce a second quantity of a second traded product; and determining asecond water quantity constituent in the second quantity of the secondtraded product; using a second data feed to constantly feed to the oneor more processors a varying parameter of a second traded product; usingone or more processors to repeatedly detect the varying parameter of thesecond traded product in the second data feed and to receive at leastonce, in regard to the second traded product, the second quantity ofwater utilized to produce the second quantity of the second tradedproduct and the second water quantity constituent in the second quantityof the second traded product; using the one or more processors torepeatedly determine an index value of water applied to a particularamount of water based on the repeatedly varying parameter of the firsttraded product, the first quantity of water utilized to produce thefirst quantity of the first traded product, the first water quantityconstituent in the first quantity of the first traded product, and basedon the repeatedly varying parameter of the second traded product, thesecond quantity of water utilized to produce the second quantity of thesecond traded product, and the second water quantity constituent in thesecond quantity of the second traded product, using the one or moreprocessors to continually adjust the index value of water applied to theparticular amount of water based on changes in the constantly receivedvarying parameter of the first traded product and changes, if any, toone or both of (i) the first quantity of water utilized to produce thefirst quantity of the first traded product and (ii) the first waterquantity constituent in the first quantity of the first traded product,and based on changes in the constantly received varying parameter of thesecond traded product and based on changes, if any, to one or both of(i) the second quantity of water utilized to produce the second quantityof the second traded product and (ii) the second water quantityconstituent in the second quantity of the second traded product, havingthe one or more processors instruct a digital display device to displayadjusted index values of water.
 11. The method of claim 10, furthercomprising using the one or more processors to determine, in combinationwith the index value of water, a market value of a portion of theparticular amount of water based also on at least one of (i) a qualityof the particular amount of water from a particular source and (ii) ageographical region or location of the particular amount of water. 12.The method of claim 10, further comprising using the one or moreprocessors to determine, in combination with the index value of water, amarket value of a portion of the particular amount of water based alsoon a geographical location of the particular amount of water.
 13. Themethod of claim 10, further comprising using the one or more processorsto determine, in combination with the index value of water, a marketvalue of a portion of the particular amount of water based also on aquality of the particular amount of water from a particular watersource.
 14. The method of claim 10, further comprising determining waterquality based on an amount of one or more substances in a collateral orwater asset comprising water, wherein the one or more processors areconfigured to determine a value of the collateral from the water qualityof the collateral or water asset and from the index value of water oradjusted index values of water.
 15. The method of claim 10, furthercomprising using the one or more processors to combine the index valueof water with at least one of (i) a quality of the particular amount ofwater from a particular source and (ii) a geographical region orlocation of the particular amount of water.
 16. A computer-implementedmethod of connecting traders to an exchange, comprising: utilizing afirst quantity of water to produce a first quantity of a first tradedproduct; and determining a first water quantity constituent in the firstquantity of the first traded product; using a first data feed toconstantly feed to one or more processors a varying parameter of thefirst traded product; using one or more processors to repeatedly detectthe varying parameter of the first traded product in the first data feedand to receive at least once, in regard to the first traded product, thefirst quantity of water utilized to produce the first quantity of thefirst traded product and the first water quantity constituent in thefirst quantity of the first traded product; utilizing a second quantityof water to produce a second quantity of a second traded product; anddetermining a second water quantity constituent in the second quantityof the second traded product; using a second data feed to constantlyfeed to the one or more processors a varying parameter of a secondtraded product; using one or more processors to repeatedly detect thevarying parameter of the second traded product in the second data feedand to receive at least once, in regard to the second traded product,the second quantity of water utilized to produce the second quantity ofthe second traded product and the second water quantity constituent inthe second quantity of the second traded product; using the one or moreprocessors to repeatedly determine an index value of water applied to aparticular amount of water based on the repeatedly varying parameter ofthe first traded product, the first quantity of water utilized toproduce the first quantity of the first traded product, the first waterquantity constituent in the first quantity of the first traded product,and based on the repeatedly varying parameter of the second tradedproduct, the second quantity of water utilized to produce the secondquantity of the second traded product, and the second water quantityconstituent in the second quantity of the second traded product, usingthe one or more processors to continually adjust the index value ofwater applied to the particular amount of water based on changes in theconstantly received varying parameter of the first traded product andchanges, if any, to one or both of (i) the first quantity of waterutilized to produce the first quantity of the first traded product and(ii) the first water quantity constituent in the first quantity of thefirst traded product, and based on changes in the constantly receivedvarying parameter of the second traded product and based on changes, ifany, to one or both of (i) the second quantity of water utilized toproduce the second quantity of the second traded product and (ii) thesecond water quantity constituent in the second quantity of the secondtraded product, having the one or more processors instruct a digitaldisplay device to display adjusted index values of water.
 17. The methodof claim 16, further comprising determining water quality based on anamount of one or more substances in a collateral or water assetcomprising water, wherein the one or more processors are configured todetermine a value of the collateral from the water quality of thecollateral or water asset and from the index value of water or adjustedindex values of water.
 18. The method of claim 16, further comprisingusing the one or more processors to combine the index value of waterwith at least one of (i) a quality of the particular amount of waterfrom a particular source and (ii) a geographical region or location ofthe particular amount of water.
 19. The method of claim 16, furthercomprising using the one or more processors to determine, in combinationwith the index value of water, a market value of a portion of theparticular amount of water based also on at least one of (i) a qualityof the particular amount of water from a particular source and (ii) ageographical region or location of the particular amount of water.
 20. Acomputer-implemented method of connecting traders to an exchange,comprising: at least one of (a) determining a first quantity of waterutilized to produce a first quantity of a first traded product; and (b)determining a first water quantity constituent in the first quantity ofthe first traded product; using a first data feed to constantly feed toone or more processors a varying parameter of the first traded product;using one or more processors to repeatedly detect the varying parameterof the first traded product in the first data feed and to receive atleast once, in regard to the first traded product, at least one of thefirst quantity of water utilized to produce the first quantity of thefirst traded product and the first water quantity constituent in thefirst quantity of the first traded product; at least one of (a)determining a second quantity of water utilized to produce a secondquantity of a second traded product; and (b) determining a second waterquantity constituent in the second quantity of the second tradedproduct; using a second data feed to constantly feed to the one or moreprocessors a varying parameter of a second traded product; using one ormore processors to repeatedly detect the varying parameter of the secondtraded product in the second data feed and to receive at least once, inregard to the second traded product, at least one of the second quantityof water utilized to produce the second quantity of the second tradedproduct and the second water quantity constituent in the second quantityof the second traded product; using the one or more processors torepeatedly determine an index value of water applied to a particularamount of water based on the repeatedly varying parameter of the firsttraded product, based on at least one of (i) the first quantity of waterutilized to produce the first quantity of the first traded product, and(ii) the first water quantity constituent in the first quantity of thefirst traded product, based on the repeatedly varying parameter of thesecond traded product and based on at least one of (i) the secondquantity of water utilized to produce the second quantity of the secondtraded product, and (ii) the second water quantity constituent in thesecond quantity of the second traded product, using the one or moreprocessors to continually adjust the index value of water applied to theparticular amount of water based on changes in the constantly receivedvarying parameter of the first traded product and changes, if any, tothe at least one of (i) the first quantity of water utilized to producethe first quantity of the first traded product and (ii) the first waterquantity constituent in the first quantity of the first traded product,and based on changes in the constantly received varying parameter of thesecond traded product and based on changes, if any, to the at least oneof (i) the second quantity of water utilized to produce the secondquantity of the second traded product and (ii) the second water quantityconstituent in the second quantity of the second traded product, usingthe one or more processors to combine the index value of water with aquality of the particular amount of water from a particular source, andhaving the one or more processors instruct a digital display device todisplay adjusted index values of water.
 21. The method of claim 20,further comprising determining water quality based on an amount of oneor more substances in a collateral or water asset comprising water,wherein the one or more processors are configured to determine a valueof the collateral from the water quality of the collateral or waterasset and from the index value of water or adjusted index values ofwater.
 22. A computer-implemented method of connecting traders to anexchange, comprising: determining a first quantity of water utilized toproduce a first quantity of a first traded product; using a first datafeed to constantly feed to one or more processors a varying parameter ofthe first traded product, the traded product capable of being physicallyconsumed by a consumer; using one or more processors to repeatedlydetect the varying parameter of the first traded product in the firstdata feed and to receive at least once, in regard to the first tradedproduct, the first quantity of water utilized to produce the firstquantity of the first traded product; using the one or more processorsto repeatedly determine an index value of water applied to a particularamount of water based on the repeatedly varying parameter of the firsttraded product and based on the first quantity of water utilized toproduce the first quantity of the first traded product; using the one ormore processors to continually adjust the index value of water appliedto the particular amount of water based on changes in the constantlyreceived varying parameter of the first traded product and changes, ifany, to the first quantity of water utilized to produce the firstquantity of the first traded product, using the one or more processorsto combine the index value of water and/or adjusted index values ofwater with a quality of the particular amount of water from a particularsource, having the one or more processors instruct a digital displaydevice to display adjusted index values of water.
 23. The method ofclaim 22, further comprising determining a water quality based on anamount of one or more substances in a collateral or water assetcomprising water, wherein the one or more processors are configured todetermine a value of the collateral from the water quality of thecollateral or water asset and from the index value of water or adjustedindex values of water.
 24. The method of claim 22, further comprisingusing the continually adjusted index values of water to set at least oneparameter of a water product.